This is the largest convention and showcase in NATA history. Over
100 manufacturers and suppliers exhibiting in 320 booths; over 20 new
product introductions; and for the first time the product exhibitions of
AT&T/Western Electric and GTE-Automatic Electric. We are now an
industry fully established in prominence and prestige. And we are now
the most important trading organization in telecommunications. New and
existing products will be sold here; new distributor relations will be
struck here; and new educational experiences will be enjoyed here.

No other organization in telecommunications can make these claims.
But most importantly, we find ourselves where we are today because we
have struggled to be here. We have courted conflict not for its joy,
but because it was thrust upon us by necessity. Our willing espousal of
the difficult and controversial nurtured the inventiveness and dynamics
which continue to be the mainstay of our influence and strength.

One year ago we promised you renewed organization growth. Our
premise was that this organization would be as dynamic in its growth as
the industry it represents. From that start we have nearly doubled NATA
membership, bringing it from 327 to 571 members. Joining our ranks is
AT&T Information System and GTE-Automatic Electric. They come to us
on a written agreement that acknowledges and accepts their legal
accountability to the independent manufacturers, suppliers and
distributors who make up the core of this organization and who give NATA
its reason for being.

We have said to the regulated telephone industry, and to its
affiliates, that we will not deny anyone the commercial and competitive
benefits of membership. But we have chosen to permit their entry only
on terms that reinforce the missions of NATA and of the independent
distributors and manufacturers it represents. We continue to hold that
regulated telephone companies and their affiliates will be called to
legal account and responsibility whenever such action is required. So
long as our objective is the protection and promotion of independent
competition, there is no near term prospect that NATA can or will become
a consensus organization. Expanding Borders

We also promised one year ago to seek out the membership and
participation of companies outside our borders--those who enjoy the
benefits of the US market and, therefore, must share an obligation to
contribute to its preservation, and to this nation's free trade
policies upon which we all depend. Because of that promise, NATA today
is truly international in its scope, made up of members who include
practically all the major communications equipment manufacturing firms
in Wester Europe, Canada, Japan and the Far East. In recognition of our
new role we are proud to announce that NATA and the Communications
Industries Association of Japan have come together in exchanging
honorary memberships.

In this new role, we will seek the assistance of our friends in
expanding the opportunities of US manufacturers in all overseas markets
as they reap the benefits of our markets. The channels of trade must be
equally wide in both directions if the distribution network we have
built with such difficulty is to survive in this country.

In addition to our promise of expanded membership--domestic and
foreign--we also committed ourselves to deepening relationships with our
own members. Consequently, in the last year we broadened our contacts
with, and support of, state interconnect associations; worked arduously,
but with growing frustration, to expand and improve COG operations;
provided training, or support for training, in improving the delivery of
network services; and established emergency installation support
services during the CWA/Bell System Strike. And throughout all our
endeavors we improved our publications to bring you more accurate and
detailed information; and, in our new Source Book, to improve your
marketing prospects with retail buyers.

The ineluctable progress of this association would have been work
enough, but inasmuch as we are the interconnect industry, our work was
tarnished by forces over which we had no control.

This was the year of preparation for the breakup of the Bell
System. While it created new and exciting relationships for independent
manufacturers, it also signaled the realization that, for us at least,
not much has changed.

The court decision allowing the Bell operating companies to
re-enter the terminal equipment market occasioned a precipitous decline
in both the quality and quantity of COG services. Installation services
supplied by the BOCs deteriorated throughout the year; and the reason
does not appear to result from the dislocations one would normally
expect from divestiture.

The Bell Companies also decided to get a jump on the terminal
equipment market by beefing up Centrex as an equipment service. The
Antitrust court said the BOCs could re-enter the communications
equipment business with zero market share. But Cetrex became the
vehicle for circumventing the decree. The BOCs enhanced Centrex with
PBX feature services; offered it in traditional key system markets; and
precipitously reduced prices to gain preferential advantages over our
equipment market.

Throughout the year, as we fought these strides against independent
competition, we quickly learned that regulatory and legal biases are
still weighed toward carrier competition in the new environment. Once
again, regulators are shutting their eyes to the cost of anticompetitive behavior to general ratepayers, as once again we persist in fighting the
crosssubsidization of regulated services aimed at the competitive
market.

AT&T, of course, was not to be outmaneuvered. In one of this
country's more brilliant financial strokes, the Bell System's
investment in used communications's equipment was written down from
$9.5 to $2.8 billion. The meaning for the competitive market is that a
price war will avail no one. New equipment cannot compete at the price
of old, just as new cars do not compete against used ones; and it is
well to remember that used car maintenance is triple or quadruple the
cost of new. Unfortunately, it appears telephone customers are on the
verge of relearning that same painful reality which was so well taught
to them year ago by the automobile industry.

Because of these and other developments, because of destructive
price competition throughout the year, there is much speculation about
the survival of this industry. The speculation feeds panic and our
industry is itself asking the question.

I believe you will survive--handsomely and profitably. You have a
customer base from which to work, one which if attended and served will
give you a continuing nucleus of business from which steady and
profitable growth can be achieved.

You have service organizations which should become new profit
centers within your businesses. The carrier industry in selling off its
used equipment is not going to be able to maintain it with the speed of
current day demands, or with the lackluster response which historically
has characterized its reaction to customer service needs. They and
their customers will need your help; and you will find new opportunities
in specialized service markets.

So, in customer assets, marketing and service organizations you
have the edge if you choose to capitalize on it. Product sales will be
less important than the marketing of your company reliability, technical
proficiency and service consistency.

Communications equipment sales will also be less important than the
system sales you configure to serve the customer's business and
work requirements. In the new environment, this industry through
marketing will merge communications and computer technologies faster
than the computer industry by itself would ever have dreamed possible.
Computer work enhancements to communications equipment will become your
niche, and will afford the competitive edge whereby you remain strong
and viable. New products will give generalized computer enhancements,
but it will be your work to customize the enhancements to individual
customer needs.

As you grow, NATA will grow again. We will expand into
representation of the computer industry because your operations will
become a critically important component of that industry's success.
We will also grow into a new participation with the unregulated
affiliate operations of the carrier industry. But the conditions of our
growth will remain the same. We will continue to stand for the
protection and promotion of an independent communications equipment
industry--one which is not affiliated with a regulated local exchange
network through which advantages in access and price can be conferred
because of regulatory prejudice and preference.

You will continue to have legal and legislative support working
against government policies which are potentially adverse to your
interests, and for nondiscriminatory government policies beneficial to
all competitive interests. And we will strengthen our services all
along the lines of importance to your business venture. We will
continue to work for improvement and efficiency in the delivery of
network services; and we will begin work on contingency plans to assure
that future CWA strikes do not victimize all the competitive components
of this industry while they exact minimal injury to the parties caught
in labor disputes. New Programs

In the new year, we will begin developing seminar and educational
materials for the industry; studies for the dissemination of information
concerning personnel and human resources in the industry; and the
promotion of educational curricula at public and private educational
institutions to relieve personnel shortages in the industry.

We have come a long way. But we are not bloated by our success.
The events of each day are enough to convince us of how much further we
have to go; and they humble us in the conviction that no success can be
built upon conceit or any sense of our own self-importance. This
association, like this industry, was built on the necessity of
constantly proving its value. We and you remain steadfast in the
necessity of making that proof. We and you are measured by it and never
forget the obligation and commitment we have to each other in meeting
that measure. We wish you success as we work for it.

COPYRIGHT 1984 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.